The two biggest names on the high street yesterday warned the chancellor against targeting consumers in today's Budget as he attempts to fill the black hole that has opened up between government spending plans and revenue.

Tesco's chief executive, Sir Terry Leahy, said: "We want no more taxes. Consumers are keeping the economy going and the prospect of higher taxes or interest rates would be a big hit on consumer confidence."

Sir Terry was speaking as he announced an impressive set of results, with annual profit up 14.7% at £1.4bn. Sales were ahead 11.5% to £28.6bn and Sir Terry described the figures as "a good performance".

At the same time Roger Holmes, chief executive of Marks & Spencer, announced a dip in sales of clothing, especially within the M25, and warned Mr Brown: "There has been a marked change in how consumers are feeling."

Mr Holmes said M&S had been predicting since last year that the rate of growth in retail spending could not be sustained, but he conceded: "It is more marked than we had expected."

Trading has been hit by this year's late Easter, but sales of clothing, footwear and gifts were down 0.3% in the 11 weeks to March 29. Including homewares, like-for-like sales were off 0.4%. The figures were poorer than rival retailers. In the third quarter, sales were up 8.8% and Mr Holmes had forecast growth slowing to 3-5%.

Stores in the London area performed badly, clocking up an 8% fall in sales of non-food merchandise throughout the period. Mr Holmes said: "There have been particular challenges in London, including the congestion charge, the closure of the Central Line and the reverberations from City job losses."

Children's clothing sales were also grim, although food sales were ahead 4.6%, or 2.6% on a like-for-like basis. The shares closed down 14.5p at 280.75p.

At Tesco, Sir Terry suggested that this year would sort the retailing wheat from the chaff. "It has become a winners and losers market - and we are one of the winners," he said. The group's shares closed up 8p at 197.25p. Fourth quarter sales were ahead 4.4%, compared with the 1.3% recently reported by Sainsbury.

Tesco has recently been referred to the competition commission over its planned bid for Safeway and has been linked with ailing Dutch group Ahold. But yesterday Sir Terry was tight-lipped over both plans, saying only that Tesco would "engage constructively" with the competition commission and refusing to be drawn on Ahold.

The group already has a big international portfolio, with stores in 10 countries. Underlying international profits climbed 78% to £212m. Sir Terry is now in acquisition talks with a Turkish retailer, but pointed out there is much more growth left in its existing territories. Tesco also reported personal finance profits up from £40m to £96m. The internet operation made £12m, up from £400,000.